Rehr: FCC Must Include Satcasters' 'Lack Of Candor' In Merger Review

July 15, 2008 at 11:46 AM (PT)

In a letter to FCC General Counsel MATTHEW BERRY, NAB Pres./CEO DAVID K. REHR asked the Commission to include a look at XM SATELLITE RADIO and SIRIUS SATELLITE RADIO's "lack of candor" in its review of the companies' proposed merger, asserting that "the simple fact that the applicant is willing to deceive the Commission raises qualification concerns."

"Under the Communications Act," wrote REHR, "the Commission must address as part of the merger proceeding the allegations in the record regarding lack of candor. If it determines that the allegations raise substantial and material questions of fact, it is required by law to designate the applications for a hearing. Either way, the candor issue may not legally be deferred to a subsequent enforcement proceeding."

The simple fact that the applicant is willing to deceive the Commission raises qualification concerns.

REHR said that "whether XM and SIRIUS are in violation of the interoperable radio rule is not the key issue. Rather, the Commission must consider the separate question of XM’s and SIRIUS' willingness to deceive the Commission on an issue that they themselves have made material to the merger proceeding. Moreover, the Commission must resolve this issue before it can act on the pending merger application."

"XM and SIRIUS cannot be relied on to comply with the letter and the spirit of any voluntary commitments they make or any merger conditions the Commission may impose," concluded REHR. "The fact that the Commission refuses to place in the record of this proceeding additional information regarding the scope of the companies’ malfeasance that the Enforcement Bureau ordered released a year ago underscores this conclusion. Indeed, based on the record of the merger proceeding, the Commission should fully expect that XM and SIRIUS will make every effort to avoid the requirements of the conditions whenever it suits their business interests to do so. For the forgoing reasons, the Commission may not legally approve the merger based on the record. It may not legally defer the candor and reliability issues raised in the record to an enforcement proceeding but must address the issues in the merger proceeding."

The letter was sent in response to reported comments by BERRY's office that indicated a belief that the candor issue can be addressed separately without further investigation and without transparency.